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Rationale

  • Social perspective:

Protection of workers' rights

  • Economic perspective:

A tool against unfair competition such as social dumping

Including social clauses in FTAs is a way to ensure that trade liberalization impoves labour standards rather than puts them at risk.

THANK YOU for your participation and best of luck in your professional career!

Tzvetomira Radoslavova

Technical Officer in OSH Legislation

LABADMIN/OSH Branch

radoslavova@ilo.org

N.b. This presentation has been prepared on the basis of the ILO publication "The Social Dimensions of Free Trade Agreements" http://www.ilo.org/global/research/publications/WCMS_228965/lang--en/index.htm

Including social clauses in FTAs

Empower yourself; explore on your own

Exercise:

5 teams; each team to identify 1 trade agreement between the EU and a country/region containing labour provisions on:

- forced labour

- child labour

- freedom of association and collective bargaining

- occupational safety and health and labour administration

- migration

What the labour clause(s) say?

Time: 15 mins

1. Initial approaches focused on prison and forced labour, which had

been an issue of domestic anti-competitiveness for nearly a century. As

global trade became especially prominent towards the latter part of the

19th century, foreign nations exporting goods made by prisoners threatened

the profitability of domestic manufacturers in importing nations. In

order to stave off the risk of foreign nations “dumping” or undercutting

domestic prices in a predatory manner, a number of English-speaking

countries adopted laws that outlawed the import of products made using

prison labour, starting with the United States in 1890.

2.Early attempts to introduce social clauses: the Havana Charter of 1947, which recognized workers’ rights and fair labour standards.

3. Debate on whether to include more comprehensive labour provisions in the WTO framework. The compromise reached at the Singapore Ministerial Conference of 1996 named the ILO the competent organization to resolve labour disputes.

Resources:

- Full text access to European FTAs and labour rights provisions

http://www.ilo.org/global/standards/information-resources-and-publications/free-trade-agreements-and-labour-rights/WCMS_115822/lang--en/index.htm#P4_728

- Regional Trade Agreements Information System (RTA-IS)

http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx

Increase in number of labour provisions in bilateral and regional trade agreements, 1990-2013

Since the adoption of the North American Agreement on Labour Cooperation (NAALC), which is attached to the North American Free Trade Agreement (NAFTA), trade agreements with labour provisions have increased significantly, from four in 1995, to 58 in 2013.

By June 2013, of the 248 regional trade agreements that were in force and notified to the WTO, 58 contained labour provisions.

Trans Pacific Partnership

(under negotiation)

Definition: The Trans-Pacific Partnership Negotiation (TPP) is a multilateral free trade negotiation, that aims to integrate the economies of the Asia-Pacific region.

Members: currently, there are 11 countries taking part in TPP negotiations including: United States, Canada, Mexico, Australia, New Zealand, Peru, Chile, Singapore, Malaysia, Vietnam and Brunei.

Scope: TPP is considered to be one of the most important trade negotiations of Vietnam now, which includes in not only trade provisions like market opening for goods and services, but also other non-trade ones like investment, labor, environment, IP…

Source: http://wtocenter.vn/

EU-Vietnam FTA

Early announcement (under negotiation)

Source: http://trade.ec.europa.eu/

Key figures

  • Bilateral free trade agreements were first formed in the 1970s, and their major proliferation occurred in the 1990s and 2000s.
  • In 1995, exports between countries with a bilateral free trade agreement represented the 0.6% of all global exports.
  • By 2012 exports under bilateral agreements rose to 5.5% of all global exports.
  • In 2011, exports under bilateral agreements represented between the 1% and the 3,25% of countries

Labour law developemnts in Viet Nam

  • New Labour Code approved in June 2012
  • Implementing Regulations adopted in 2013 and 2014: www.ilo.org/natlex
  • OSH Law currently under development: www.ilo.org/legosh

Tripartite Consultation Meeting on the Draft OSH Law, Nov. 2014, Viet Nam

www.molisa.gov.vn

Types of labour provisions

CONDITIONAL PROVISIONS

i) Pre-ratification conditionality: cases where the conclusion of a trade agreement is made conditional on respect for certain labour standards

It is a characteristic of US trade agreements, and, so far, the US seems to be the only country officially to require the improvement of labour standards prior to ratification.

Pre-ratification conditionality has mainly concerned legislative issues.

E.g.

Morocco - Bahrain - Oman - Peru - Colombia - Panama

ii) Post-ratification conditionality: cases where the trade agreement has already been concluded and includes conditional labour provisions.

Post-ratification complaints have mainly dealt with the application

of existing domestic labour law.

Conditional trade agreements usually link commitments on labour standards to:

- Cooperative activities: In this regard, the agreements typically define a number of areas and means of cooperation, including research, exchange

of policies, and technical assistance in the area of labour standards.

- Enforcement mechanism: The core of this mechanism is a dispute settlement process consisting of formal consultations and the establishment of a panel, which can make a binding determination on allegations.

PROMOTIONAL PROVISIONS

Promotional provisions are common in North-South agreements (all of

these agreements, with the exception of two, include promotional provisions).

All South-South trade agreements, especially regional integration agreements concluded among developing countries, include

promotional provisions.

Examples: EU-Republic of Korea Trade Agreement, the Chile-Colombia

Trade Agreement, and the Memorandum of Understanding on

Labour Cooperation attached to the New Zealand-Hong Kong, China

Trade Agreement.

In 34 out of the 58 existing trade agreements with labour provisions, the

provisions are exclusively promotional –i.e. they do not entail any direct

economic consequences in case of non-respect of the labour provisions.

In most cases, promotional provisions take the form of cooperative activities between partner countries.

Impact of FTA on the labour market

The results from studies are not conclusive and even though trade openness is expected to translate into welfare gains and labour market improvements, these gains are not guaranteed. One reason could be trade diversion.

FTAs may cause lower levels of productivity, increasing the probability of higher levels of unemployment, lower wages, or higher levels of informality, too.

Successful stories: Cambodia

ILS and International Trade Agreements

Origins: BFC launched its project in 2001 as a direct result of a trade agreement between Cambodia and the U.S. which provided Cambodia better access to the U.S. market in exchange for improved working conditions. BFC eventually became a model for similar programs around the world, including the ILO’s Better Work program.

Components: As Cambodia’s garment industry continues to grow, so do BFC. Today, BFC operate three core programs—monitoring, training and advisory services.

E.g. How the advisory services work?

BFC’s one-year Advisory Services provides an individualized approach to help factories respond to issues identified in assessment reports. BFC provides support to help enterprises start and stay on a path of ongoing improvement.

Following an assessment, BFC assigns an advisor to work directly with factories to develop a plan for the factory to implement improvements. We start with helping factories create a Performance Improvement Consultative Committee (PICC), a joint management-worker committee specifically tasked with developing and implementing a factory improvement plan.

Advisors work intensively with each factory in the Advisory Services program, visiting the factory approximately nine times per year. Support includes in-person meetings and coaching sessions, followed by phone and e-mail support and advice. Following review and consultation with the PICC, our advisory staff updates buyers on the proactive steps factories are taking towards improvement through progress reports issued twice a year.

Source: http://betterfactories.org/

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